VCCommunity

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Serve Your VC Network

This is part three of the VC Community Series. Check here for Part 1: Rise of VC Community & 2: Building Community. 

Quick background, I’m the General Manager at Union Square Ventures. I run our 6+ year old community, the USV Network. The VC Community function has increased in popularity and complexity. VC Network structures are a core part of many similar organizations like Accelerators, Incubators and Professional Organizations. This series is focused on sharing best practices for starting, building, and growing a community in these organizations.

The key to any great product is building something customers want. VC Networks are no different. Design your product to serve your customers. We’ll look at the factors that enable you to make the best design decisions for your network. 

Understanding who you are and how you define your community is the first step (refer back to Part 2 if you haven’t defined the characteristics of your org yet). Now that you understand your capabilities, time to understand your audience. 

Describe your customers

At USV, we have 60+ technology startups spread across North America and Europe. They are in a number of industries and range in maturity from companies less than a year old to companies that have been in business for over 10 years. All of the companies fit into our investment thesis, but even that can range from doctors sharing serious medical cases to helping developers easily send SMS messages. The companies are varied but many of their challenges are the same: building a team, leveraging network effects, finding customers, and building products. 

What are the characteristics of your potential network? How many organizations are you including in your community? Where are they geographically located? What do they have in common? How long have these companies been in business? What is their organizational maturity—or the size of their teams? Are they open to collaboration? Are they tech savvy? Let’s start with a few easy ones:

Where is your community located?

If you have a physical space with all of your members in one place, easy, you have a gravitational pull in that spot. If your members are spread out, you need to think more strategically about how to connect them. 

  • Same place: Defined by central meeting place or office.
  • Different places, same city: Connect people in person nearby.
  • Different places, different cities: Occasional in person or digital.
  • Different places, some overlapping cities: Can build local and global.

How tech savvy is your community?

There are fantastic tools in the market to manage communications, contacts, and organizational discussions. However, tools are worthless if no one is willing to use them. 

  • How willing or able is your community to adopt new technology?
  • Do digital or paper resources work better?
  • Is your community more prone to want information from email, website, or phone call? This is a great place to ask if you don’t know.
  • Do you have the skills or access to the talent to build tech to support this community? If tools are required, do you have the capability to manage them?

What is your budget to manage the community?

Sometimes it’s hard to know how much money you’ll want to budget for your community outreach and network building. Having a rough estimate around the size of your budget will be a good constraint to understand how you serve your customers.

  • None, time to get creative! 
  • Budget for tools only
  • Flexible/Fixed
  • Paid by members/pay to play

Who is your audience within the community?

Even if you’ve defined your organization, you have to make the design decision about the participants you plan to serve. You can modify this over time but defining the initial scope will help focus resources. 

  • VC: Investments: any employee, executives only, or founders only?
  • Seed:  Investments: any employee, executives only, or founders only?
  • Accelerator: Participants: any employee, founders only, mentors included?
  • Professional: Just members or potential members too?

Not all of these design decisions may have clear answers at this stage. Just as we teach entrepreneurs, it’s key to “get out of the building” and talk to customers. Setup a few conversations with your new customers and get to know what they’re looking for. In my experience, entrepreneurs and operators will ask for help with lots of challenges in those conversations. Be patient, define your customers before you commit to what you’re going to provide. 

Not all communities are created equal

Given the growing number of VC Community roles, Accelerators and Incubators, there is a lot of existing advice about how to serve your community. Understanding the differences between your network and the next one will allow you to make smarter decisions for your unique community. 

After 50+ conversations with Network or Community building peers, here are the common benefits and challenges of serving these different types of networks: 

Serving an Institutional VC Community:

Benefits:

  • Long term, more flexibility to experiment
  • Range of experience in network
  • Big teams, lots of division of work
  • Low turnover of companies
  • External reputation of companies adds to credibility of the network
  • Relationship building
  • Companies adopt market trends together (ie: mobile)
  • If on investment team, can see behind the scenes, know co’s #s

Challenges:

  • Not one and done, long term relationships
  • Network only expands with investments
  • Rate of change is slow
  • Fatigue of services over time
  • Varied needs
  • Not network peers for everyone since different businesses
  • Potentially competitive companies within one community

Serving an Incubator/Seed Stage Community:

Benefits:

  • All of the companies are the same size
  • Smaller teams, get to know everyone quickly
  • Similar challenges and required connections (business 101)
  • Large # of companies quickly (?) or slowly (?)
  • Relationship building is done in cohorts
  • See behind the scenes, know co’s #s

Challenges:

  • May not have market leaders and company reputations may be unknown
  • Small # of people with open time, not many employees at each company
  • Less proven, companies can build or bust
  • Potentially competitive companies within one community
  • Clingers after they outgrow the stage but still want resources

Serving an Accelerator Community:

Benefits:

  • Very clear timeline and goals
  • Cohort is all in sync
  • You can supplement expertise with mentors or outside resources (all groups can)
  • Batch favors/resources at once.
  • See behind the scenes, know co’s #s
  • Smaller number of people
  • Pre-planned Weekly/Daily interaction
  • Shorter time to “Alumni” who could help
  • Time to anticipate and prepare in cycles

Challenges:

  • Not a lot of time
  • Short relationship
  • Expertise and experience may vary
  • All companies need the same resources at the same time: $, talent
  • Experiments may be static in each cycle.
  • Potentially competitive companies within one community

Serving a Professional Group’s Community:

Benefits:

  • Members speak the same language
  • Same field and challenges
  • Self-selected group
  • Relationship building over time
  • Invested in groups’ success
  • Clear success metrics outlined in bylaws or group charter
  • Tight control over membership (you can remove bad actors)
  • Can help members recruit members

Challenges:

  • Building trust, since it’s opt-in or pay-to-play
  • Varied experience of members
  • Expectations are varied or need to be managed
  • Desire to deliver value immediately
  • Competing for time
  • Only as open as members
  • Different access to resources for companies or organizations

The key to success is finding what works for you. In the next part of the series we will look at how to get started, stories from the experts, and how to measure success.

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Rise of VC Community

This is part one of the VC Community Series. 

Since 2010 year, there has been an increased focus on how VCs can deliver more value to portfolio companies. Whether a firm is interested in developing more value-add to compete for deals against other firms or if it’s to provide resources to help ensure better outcomes of the existing portfolio, it doesn’t matter. There is a growing focus on expanding value.

One of the fastest growing signs of this is the rise of the VC Community role.

Traditionally, VC firms were comprised of investment roles and administrative roles only. Their responsibility was to find great businesses, write checks and, depending on the firm, join the board to help those companies grow to a successful exit. Partners and investors were expected to provide their expertise and advice to portfolio companies, but those services were limited by Partner time. Entrepreneurs were encouraged to tap into external networks to find peers, seek professional expertise, and to hire talent. Venture Capital firms were experts in writing checks and were evaluated on their ability to get deals done and provide strategic advice.

In 2010, USV planned to expand their team to better connect their existing portfolio companies. They created the first General Manager role at USV,

“It will be the job of the GM of the USV Network to build on our early work to create a useful and sustainable connection between the portfolio companies. Think of it as a community manager for the USV portfolio. The community is small, and private, but populated by people and companies who are having a big impact on the web.“

In June 2010, they hired Gary Chou, the first General Manager of the Union Square Ventures Network. A mouthful of a title, but it was one of the first internal early-stage VC roles that was focused on building community among portfolio companies.

Five years later, there are now 30+ VCs with a dedicated team member focused on community. Out of the top 50 ranked early stage VC firms, the majority have one or more people focused on community efforts. A number of angel groups, accelerators and incubators are increasing their focus on connecting their portfolio companies to each other.

USV Network Evolution

Today, I run the USV Network at Union Square Ventures.  I’ve been growing our community for over three years and my predecessor, Gary Chou built the role from the ground-up for three years prior to that.

Since building a community in VC is an emerging field, there is a lot of conversation about why this is important, who should create one, and how to get started. I’m often asked for advice on how we’ve built the USV Network, our community of portfolio companies.

Questions aren’t limited to VCs, I’ve also been approached by accelerators, incubators, professional organizations, and non-profits, looking to build a community among their members or portfolios. The goal of the role is to support a group of individual companies at scale, through education, connections and resources.

So whether you’re trying to figure out if you should build this role in your organization, where to get started or if you want to take community organization to the next level, this blog series will walk through the process of building from scratch.

Creating a VC Community thoughtfully

There is a definite benefit for companies and VCs alike who create this type of service and that it is increasingly becoming a point of competitive differentiation. The risk is that if the community is not created with intent, it can be detrimental to the firm (too much overhead) and to the company (overwhelmed or too dependent).  

The rapid growth of the VC Community role across firms is a strong signal of the importance, but comes with a few warnings. Quality support is important but too many communities can be a risk to the portfolio companies, the VC’s reputation, and the perspective of LPs.

If you’re going to create a new community, here are some guidelines to make sure you’re setup for success:

Should you start a community for your portfolio?

If you’re thinking about expanding your community role or building one from scratch, consider what your VC firm offers, understand what the culture is, figure out how that applies to your role.

The best place to start is to look at the unique characteristics of your firm in order to figure how to leverage those to create unique value add.

What should you evaluate first? 

Before anything else, state the thesis of your organization. Your company culture matters. What is your investment thesis? What do you believe to be true? Use those to apply them to your own network.

At USV, we believe in networks. 

Thesis 6/8/11: 

image

Thesis 12/14/2015:

image

We’ve applied our thesis, the belief in networks to empower bottom-up, emergent behavior, to the way we serve our network, hence the name USV Network.

What is the goal of your organization?

Every VC, accelerator, and incubator is different. To best serve the community, it’s important to understand both the scope of your services and the characteristics of the companies you serve.

First, define the scope of your services. If you are an accelerator, you may only work with companies for a short time. If you’re a VC, you may remain with a company for several years. Defining the relationship expectations of your organization to the community is the first set of constraints.

For USV, we work with our companies when we make an investment all the way through to an exit. Whether that exit is an IPO, an acquisition or a shut-down, we continue to work with those companies. We anticipate we’ll work with a company around 10 years, in a few cases, even longer.

Looking at our portfolio, here are some things we kept in mind when we were getting started:

  • We can be long term with our thinking. We spend years with each company so we don’t have to deliver all of the value in a short period of time, we can deliver value through long term relationships.
  • If we include all employees, we have a large number of network members. We have a number of individuals we can tap into, it’s not just limited to a small number of small teams.
  • Experiments can be tested multiple times with the same groups of people, instead of starting with a fresh group each time. Iteration and feedback are easier when community members can see and weigh in on changes over time.
  • We can build lasting relationships between companies.
  • We have a range of companies which means there is a lot of ground to cover. We have investments from 2004 onward across various locations, industries and business models. There is not a one-size-fits-all model to support.
  • We wanted to keep the community manager role to a single person to ensure we were building something lightweight and sustainable. Networks benefit from low centralized overhead, unlike top-down advisory services.

Solve problems in your community

Take a look at your community. Do you have things in common with ours or do you have the opposite scenario? 

Take some time to spell out the unique components of your organization. Understanding what works for you will be the key to getting started successfully.

In the next post in this series, I’ll provide next steps and examples of how VCs, accelerators, incubators and beyond are serving their communities. 

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